A few days ago a concerned follower DM’d me asking me if I’m worried that I’m too bullish on the market. He said, “what if we have another 50 bad years of the market, like those that ended in 1980”. I informed him that a $500 per month investment over those years would have yielded $9.4 million dollars.

“Ok”, he said, “but what about the 20 years from 1930-1950?”. Now he’s really cherry picking because that’s the great depression and a much shorter time frame. “Well”, I said “A $500/month investment during those years would have yielded $387,197. Not millions, but not bad for $500/month during the worst financial crisis in American history.

The last ten years have been great for the market. The market had an annualized return of 16.5% over the last decade. But that doesn’t mean we have flat or bad years ahead of us. Over the last 100 years the market has averaged a 10.8% annual return.

Over the last 100 year, 74 years we’ve seen the market produce a positive return. 26 have been negative. So again, the last 10 years have been good with nine of those years having an up market, but also not that out of line with the past.

Does this mean the market will be up again this year? I have no idea. Anyone who tells you they know is full of shit or trying to sell you something. But we do know that buying and holding stock in all the companies of the world guarantees you your fair share of the total market growth. As companies continue to innovate, grow, expand, sell goods and services, and profit, that growth will come back to you. Of course there’s some speculation built in. Speculators will always be trying to jump in and out of the market and from stock to stock. The result is the volatility we hear about in the headlines of stock market news. But beneath that speculation is the relentless march upwards, benefiting those who choose to buy and hold index funds.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy

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